Seattle City Council approves historic $15 minimum wage

Seattle Times: The Seattle City Council unanimously approved a $15 minimum wage Monday, giving its lowest-paid workers a path over the next seven years to the nation’s highest hourly pay.

The outcome was not in doubt as a progressive mayor and City Council throughout the spring vowed to address the national trend of rising income inequality and a city that has become increasingly unaffordable for many of its residents.

But amid the celebration outside City Hall after the vote, cautionary notes also were sounded about Seattle’s leap into the unknown.

“No city or state has gone this far. We go into uncharted territory,” said Seattle City Council member Sally Clark before the council agreed to give workers a 61 percent wage increase over what is already the country’s highest state minimum wage.

Within minutes of the vote, an organization representing national franchises vowed to sue over the law’s treatment of them as large businesses.

And 15 Now activists, who are collecting signatures for a charter amendment that would speed up the phase-in to three years, said they haven’t yet decided whether to go forward with the measure for the November ballot.

A standing-room-only crowd made up largely of fast-food workers, union activists and 15 Now volunteers cheered the council’s vote.

“We did this. Workers did this. Today’s first victory for 15 will inspire people all over the nation,” said Councilmember Kshama Sawant, whose election in November on a $15-an-hour minimum platform helped galvanize the Seattle effort.

Mayor Ed Murray praised the vote as a bold step to address what he called more than three decades of economic policy that resulted in a dismantling of the middle class. “Today we have taken action that will serve as a model for the rest of the nation to follow,” he said.

Council members acknowledged it would take more than a gradual pay increase to make the city more affordable.

Both business and labor representatives who worked on the compromise plan said they would continue to lobby for strong education and enforcement of the higher wages that take effect in April.

Some fast-food workers, whose walkouts a year ago launched the campaign to win workers’ higher pay, cried after the vote. Brittany Phelps, who makes $9.50 an hour at a Seattle McDonald’s, brought her 5-year-old daughter to the council hearing to witness the historic vote. “I’m really happy. This means a lot,” said Phelps, brushing tears from her eyes.

Ubah Aden, a Somali immigrant who works as a home-health-care worker earning $10.95 an hour, also celebrated passage of the ordinance. “A lot of people thought, ‘Oh no, it’s not going to happen.’ It’s happening,” she said.

But the same activists jeered and chanted “Shame!” as the City Council voted down several amendments introduced by Sawant to make the final measure more worker-friendly.

As she did Thursday when the bill was voted out of committee, Sawant attempted to remove provisions that create a training wage for teenagers and disabled workers, that allow tips and health-care benefits to be counted for up to 11 years, and to move the start date from January to April.

After her efforts failed, Sawant denounced her council colleagues as corporate representatives posing as the progressive alternative to the Republican Party, and gave parts of the same speech she made Thursday after the bill passed out of committee.

But even as labor activists began celebrating, the International Franchise Association announced plans to sue Seattle to overturn the ordinance.

Steve Caldeira, the association’s president and chief executive officer, said it unfairly counts local franchise owners as large employers because of their ties to national or global chains and gives them only three years to phase in the increase, while many of their nonfranchise competitors have seven years.

“These are independently owned small businesses who have their own skin in the game. They’ve either invested their life savings or taken out loans, or maybe done both, to take a shot at the American dream,” he said in an interview at City Hall.

“We intend to aggressively sue the city of Seattle for what we believe to be an extremely unfair and discriminatory policy against those hardworking, jobs-creating small-business owners.”

Local franchisee David Jones, who owns two Subway stores in Seattle, puts his cost of a $15 minimum at $125,000 annually. He pays the stores’ 18 employees $10.50 an hour, on average; he figures he’ll have to raise sandwich prices by a dollar or more to maintain profits.

“I’m going to increase prices and work hard to provide the best service possible so that I don’t lose sales,” he said, noting that his nonfranchise competitors will have four more years to phase in the increase. “The playing field is not even.”

Murray and representatives of SEIU Local 775 said their legal research showed that franchises can be treated as part of the corporations that license them.

“We never expected the lawyers from McDonald’s to agree with us,” said David Rolf, president of SEIU, one of the unions that backed the fast-food workers strike and helped pass a $15 minimum wage in SeaTac.

Some small-business owners praised the city’s move toward a $15 minimum wage. Molly Moon Neitzel, owner of Molly Moon’s ice cream, said the mandate will drive up her labor costs by $100,000 a year, but she expects to benefit from workers with more money to spend locally.

“A hundred thousand people next year will have more money in their pockets,” she said, referring to the estimated number of workers who now make less than $15. “They’ll have more money to buy ice cream.”

Neitzel has about 80 employees at six stores in Seattle. Last fall, she raised pay for her non-tipped employees to $15 from between $11 and $13.50.

She said another probable benefit from the higher minimum wage is reduced employee turnover. “They’re so appreciative of the raise,” she said of her non-tipped employees. “Retention is great, and their quality of life has increased.”

David Watkins, general manager at the Inn at the Market in downtown Seattle, said his 50-employee hotel will begin paying a $10 minimum next April, as required under the plan, and work toward $15 by 2021.

“I’m glad it’s not $15 Now on Jan. 1. I’m glad it’s phased in. There are some good compromises,” said Watkins, who also is president of the Seattle Hotel Association and a member of Murray’s advisory committee. “We as an industry will have to learn to adjust.”

He said prices will go up in the face of higher labor costs, but no layoffs are planned at his hotel. “We don’t want to sacrifice service for labor costs,” he said.

Under the $15 minimum-wage ordinance, minimum-wage workers will get raises starting April 1, the date set by the council.

Employees of businesses with more than 500 workers will start at $11 and reach $15 in 2017. Large businesses that provide health care will have an additional year.

Businesses with fewer than 500 will be required to pay $15 in 2019. Small businesses that claim a credit for tips and benefits will reach $15 an hour in 2021. The wages increase each year under all plans.

By 2025, according to city projections, all workers will be earning a minimum wage of $18.13 an hour, nearly double the state’s current $9.32 an hour.

Kaylee Bond, 19, who works at a Seattle Subway store, said that earning more than her current $9.32 minimum will mean she can save for a car and move to a better apartment.

“On one hand, it could mean inflation,” Bond said. “At the same time though, people would have more money to spend more. “It could be better for the economy,” she said.

And to top that off, many members of the Washington State Small Business Association (they are insured under and umbrella policy) have seen their health plans doubling in cost and some are being cancelled altogether this year–leaving those families out in the cold–because of part of the Obamacare legislation.

About two weeks ago I heard a CBC interview w/an economist who said that a multi-year study his group just concluded found that it was only possible to live in Victoria if one’s weekly wages were at least C$ 13.50 an hour. This sounds right to me, and Victoria now has the same problem SF did 10 yrs ago: skilled workers have left for less pricey digs.

But this just exacerbates the problem, as now artisans must add travel time to their invoice, so nothing is gained, and more is lost….

If franchises have no other options, unskilled workers will be fired, and people with at least a B.A. will be hired in their place. There are lots of grads looking for jobs, so why not hire smarter and more cultured people? These people who fought for the minimum wage will be out of a job.

Dave, I believe you are absolutely right. For a fast food place to thrive, there has to be a profit margin.

Just this past weekend, as we were coming out of the local supermarket, we were confronted by people trying to get us to sign a petition to support a forced minimum wage hike in Massachusetts. We politely refused, realizing an argument would have been futile. These were definitely people who live on the socialist side of things.

Interestingly, the market we were at has been crushing the competition by keeping the unions out, and the food prices way down, almost 30% less expensive that all the others. The people out on the market’s doorstep, if they succeed, will destroy this store with the only reasonable prices around.

Fast food joints are already quite automated: cashiers no longer even need to know how to count because the machine spits out the change to customers. Low-skill jobs like hamburger flippers are meant to be entry-level jobs, not a job for life. This insane push for higher and higher minimum wage will simply be a big incentive for the owners to COMPLETELY replace all human workers with machines.